Bullish view
- Buy the BTC/USD pair and set a take-profit at 17,500.
- Add a stop-loss at 16,200.
- Timeline: 1-2 days.
Bearish view
- Sell the BTC/USD pair and set a take-profit at 15,800.
- Add a stop-loss at 17,500.
The BTC/USD price held steady slightly below the psychologically important resistance level of 17,000 after the Fed published minutes of the past meeting. The pair rose to a high of 16,300, which was higher than last month’s low of 16.320.
Hawkish Fed minutes
The Federal Reserve published minutes of the latest meeting held in December. In that meeting, officials voted to continue with the important quantitative tightening (QT) policy. The bank also decided to hike interest rates by 0.50% after hiking by 0.75% in the previous four meetings straight.
These minutes provided more color about the deliberations that happened in that meeting. Officials unanimously agreed to hike by 0.50%. They then predicted that interest rates will need to remain higher for longer in a bid to curb inflation.
Officials noted that projecting a hawkish tone was necessary to lower the easing temperatures in the market. Before the meeting, stocks and cryptocurrencies were surging as investors predicted that the Fed would embark on an easing phase since inflation was cooling. The statement said:
“Because monetary policy worked importantly through financial conditions, an unwarranted easing in financial conditions, especially if driven by a misperception by the public of how the Fed would react to new economic data would complicate the committee’s effort to restore price stability.”
The minutes showed that officials expect to raise rates to between 5% and 5.5% this year and then hold them there until 2024. However, some analysts predict that the Fed will need to cut interest rates later this year if inflation eases more than expected. Bitcoin and other risky assets tend to do well in a period of low-interest rates.
The BTC/USD price also reacted mildly to the new $100 million fine by New York regulators on Coinbase. The firm was fined for its lax controls in its ecosystem. It will pay a $50 million fine and then spend $50 million to boost its controls.
BTC/USD forecast
The BTC/USD price rose slightly after the latest Fed minutes. It moved slightly above the 25-day and 50-day moving averages. It also moved slightly above the key resistance point at 16,500. A closer look shows that it has formed a small inverted head and shoulders pattern while the Stochastic Oscillator has moved below the overbought level. Therefore, the pair will likely continue rising as buyers target the next psychological level of 17,500.
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